California AB 723: New Disclosure Rules for AI-Altered Listing Photos

Virtual staging has transformed real estate marketing. An empty room becomes a furnished living space. A dated kitchen gets a modern refresh. Overgrown landscaping becomes manicured in a click.

But starting January 1, 2026, California requires full transparency about these digital enhancements. Governor Newsom signed Assembly Bill 723 into law on October 10, 2025, making California the first state to require specific disclosures for digitally altered real estate images.

Here's what you need to know to stay compliant.

What AB 723 Requires

If you use digitally altered or AI-generated images in any property marketing, you must:

Include a clear disclosure on the image or directly adjacent to it stating that the image has been altered
Provide access to the original via a link, URL, or QR code to the unedited photo
Post both versions if the listing is on a website you control (like your brokerage site or personal website)

The disclosure must be "reasonably conspicuous"—meaning buyers shouldn't have to hunt for it. Labels like "Virtually Staged" or "Digitally Altered" work as long as they're clearly visible.

What Requires Disclosure

The law targets alterations that change how the property appears. If you've used photo editing software or AI to add, remove, or change any of these elements, disclosure is required:

Interior changes:

Virtual furniture, appliances, or fixtures
Altered paint colors, flooring, or wall treatments
Changed or added cabinetry, countertops, or built-ins

Exterior changes:

Modified landscaping or hardscaping
Altered facade or exterior finishes
Removed utility poles, power lines, or neighboring structures

View alterations:

Enhanced or changed views through windows
Removed neighboring properties or structures
Altered streetscape elements

What Doesn't Require Disclosure

Standard photography adjustments that make photos look better—without changing what's actually there—are exempt:

Lighting corrections and exposure adjustments
White balance and color correction for accuracy
Sharpening and clarity adjustments
Cropping and straightening
Angle corrections

The principle is straightforward: You can make a photo look better. You cannot make the property look different.

When in doubt, disclose. CRMLS guidance recommends that if you can't decide whether an image is digitally altered, go through the disclosure process anyway.

Why This Law Passed

Consumer protection drove this legislation. As AI tools and virtual staging became more sophisticated, buyers increasingly reported feeling deceived when properties looked dramatically different in person than in listing photos.

One example cited in the bill analysis: a listing showed a fully furnished kitchen with cabinetry, countertops, and a breakfast bar island. After driving hours to view the property, buyers discovered the kitchen had none of these features—they were entirely virtual.

The law aims to preserve the marketing benefits of virtual staging while ensuring buyers know what they're looking at. According to the WAV Group, "misleading advertising has always been illegal nationwide, but new AI tools that are growing in adoption by real estate agents have amplified the problem."

How to Stay Compliant

Compliance is straightforward once you have a system in place.

For MLS listings:

Label altered photos with "Virtually Staged" or "Digitally Altered" in the photo remarks
Include the original, unaltered photo in the same gallery
Label the original as "Original Photo - Unaltered"

For your website and social media:

Post both versions side-by-side with clear labels
Or include a conspicuous disclosure on the altered image with a link to the original

For print materials and flyers:

Include the disclosure statement on or adjacent to the altered image
Provide a QR code or URL linking to the original photo

The easiest approach: post both the virtually staged version and the original in your listing gallery, clearly labeled. This satisfies all requirements with minimal friction.

Consequences of Non-Compliance

AB 723 violations are more serious than a slap on the wrist. Failure to disclose constitutes a violation of California real estate licensing law, which means:

The Department of Real Estate (DRE) can take disciplinary action against your license
Violations carry potential criminal misdemeanor penalties
Your brokerage could face liability for your non-compliance

Currently, CRMLS has no fines in place for rule violations, but the Rules Committee plans to revisit fines in 2026 after the law takes effect.

What Brokers Should Do Now

If you manage agents, get ahead of this before January:

Audit current listings for any digitally altered images that lack disclosure
Update your procedures to include AB 723 compliance in listing workflows
Check your vendors — photographers and virtual staging companies should understand the new requirements
Train your team on what requires disclosure versus what doesn't
Update your IC agreements to clarify agent accountability for compliance

The law only applies to advertising under the listing agent and broker's control—not to IDX feeds or other brokers who receive data through the MLS. But you're responsible for everything you post directly.

The Bottom Line

AB 723 doesn't ban virtual staging or AI-enhanced photos. It requires transparency about them. The marketing benefits remain—you just need to show buyers what's real alongside what's enhanced.

For most agents, this means one extra step: posting the original photo next to the virtually staged version with clear labels. That's it.

California has set the precedent here, but similar legislation may follow in other states. Building disclosure into your workflow now means you're ready for whatever comes next.

Need help tracking compliance across your transactions? Document intelligence tools can help ensure nothing falls through the cracks—including the marketing materials that now require disclosure.